1. Household Behavior and Consumer Choice

3. Firms and Household Decisions

21. Allocation of Fixed Expenditure Per Week Between Two Alternatives 3.00 3.00 3.00 3.00 3.00 3.00 $ (4) PRICE (P) 0.7 2 34 5 1.3 4 32 4 2.0 6 28 3 0 0 34 6 3.3 10 22 2 4.0 12 12 1 (5) MARGINAL UTILITY PER DOLLAR (MU/P) (3) MARGINAL UTILITY (MU) (2) TOTAL UTILITY (1) TRIPS TO CLUB PER WEEK 6.00 6.00 6.00 6.00 6.00 6.00 $ (4) (P) .5 3 51 5 1.0 6 48 4 1.5 9 42 3 0 0 51 6 2.0 12 33 2 3.5 21 21 1 (5) (MU/P) (3) (MU) (2) TOTAL UTILITY (1) BASKETBALL GAMES PER WEEK

26. Income and Substitution Effects of a Price Change Price of a good or service Household buys less Substitution effect Opportunity cost of the good rises Household buys less Income effect Household is worse off Household buys more Substitution effect Opportunity cost of the good falls Household buys more Income effect Household is better off FALLS RISES